Saic Finance Company Credit Risk Management And Process Optimization

Shanghai Automotive Group Finance Co., LTD (SAIC Finance) is a substitute of SAIC Group functioning as a specified financial institution. During the last 10 years its auto finance business has been growing much faster than any other business within the company. The growing of business came up with more credit risk control problems. Although numbers of modern credit risk control measurement method have been implemented in many local commercial banks, it's not perfectly fit for auto FIs like SAIC Finance.The paper discussed several credit risk control measurement methods that are popularly used in banks domestic and abroad, and then studied the feasibilities in using them into personal auto loan credit risk control and dealer auto loan credit risk control sectors. Some modern measurement methods like KMV, Credit Metrics,Credit risk+ which is recommended by the Basel Committee, are also discussed. Research reveals that in personal auto loan sector, credit scoring method and Z score method are more efficient and effective than other methods, while in dealer auto loan sector, the traditional 5C method is still useful. Meanwhile, given enough financial information if possible, KMV or Credit risk+ method can also be introduced in analyzing the stability of dealers' future cash flows.For further development of its auto finance business, its also necessary for SAIC Finance to study successful cases from General Motors Acceptance Corp.(GMAC). The paper gives several advises in organization reconstruction, product design and information sharing in order to improve credit control process within the company.